7 Dec 2008

Genesis power prices up despite record profit

2:35 pm on 7 December 2008

Electricity user groups are questioning why State-owned electricity company Genesis Energy is increasing power prices for Wellington customers, despite posting a $99 million record profit.

They want the Government to speed up reviews into the state of the electricity market.

Prices for Wellington customers on the average household plan with Genesis will rise by about 3.3%, or $81 per year, from 11 January.

Customers on lower use plans will see a rise of 3% and prices for users on night rates will increase by 17%.

Domestic Energy Users' Network analyst Molly Melhuish says Genesis made a profit of $99 million last year and it should have dropped prices because of this.

Mrs Melhuish says the Government needs to ensure reviews by the Commerce Commission and Electricity Commission into the state of the electricity market are completed quickly, because consumers want to know why prices are rising so quickly.

Mrs Melhuish says rising power prices will hit already struggling households hard.

Minister wants answers

Energy and Resources Minister Gerry Brownlee says the electricity industry needs price stability and will meet with Genesis representatives on Monday to hear why they are increasing prices.

Mr Brownlee says there have been many price rises in the past five years and New Zealand cannot continue to have a rapidly increasing price spiral in the electricity market.

A Genesis spokesperson says the price rises are needed to meet the higher costs of generating electricity and to pass on small increases from transmission and distribution companies.

Reserve Bank Governor Alan Bollard expressed concern on Thursday that domestically generated inflation, particularly local body rates and electricity prices, remain stubbornly high.